Friday, March 22, 2013

Health Coops

Utah was one of the first states to impose a health exchange. Today, the Salt Lake Tribune announced that the Beehive State is one of the first states to impose a "health cooperative" called Arches Health.

The cooperative will start with a $85 million dollar loan from the Federal Government. The cooperative will be given special tax treatment which should give it a competitive advantage over privately owned health care. The company will concentrate on giving care to large politically active groups.

As is typical, the Tribune article by Kirstin Stewart was simply a mush of poorly researched and poorly thought through ideas. For example the article states: "Today's insurers pay doctors for services as provided, a system that rewards volume over value ... Arches will assign patients to medical homes and pay those providers lump sums."

Kirstin has the pricing motive in health care completely backwards. The direct service model is one in which doctors compete for customer's service based on quality. Lumping a whole bunch of people together and paying a lump sum emphasizes quantity.

The health cooperative is just another insurance company. As mentioned in previous posts, I worked for a Utah State owned insurance company. The fact that the company was owned by the government did not change the inherent inefficiencies of the business model. 

The idea behind "health cooperatives" is that the problem in health care is private ownership. The idea is that once we end private ownership, all health care decisions would be made politically dependent on one's group. Political decision will be more equitable than one's made directly by free thinking people.

I started writing a longer piece on why the Arches Health Cooperative is unlikely to improve health care.

Unfortunately, to really understand why health care delivered through a political structure will under perform health care delivered through a system built on individual rights requires a substantive conversation that goes beyond what I can write in a blog post.

The fact that Utah is among the first states to impose the health exchanges and health cooperatives of ObamaCare does not surprise.

I am dismayed, however, that I am unable to find any group within a 700 mile range of Salt Lake that would take an afternoon to engage in a substantive conversation about health care reform.

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